Reform package pushes gas as new energy leader

AUSTRALIA could become the world's biggest gas exporter but its domestic use of fossil fuels will decline as the carbon tax drives a gradual switch to renewables such as wind and solar, the government's energy white paper says.

The long delayed paper, released on Thursday, urges the deregulation of electricity pricing and the roll-out of smart meters, which give businesses and households greater ability to use cheaper, off-peak electricity, as part of a package of reforms to curb soaring power prices.

It also calls on state and federal governments to put in place regulations to overcome environmental and local objections to the coal seam gas industry so that coal seam gas reserves can be fully exploited.

The paper predicts a possible shuffling of global rankings of energy production, suggesting Australia could ''rival'' Qatar as the world's biggest gas exporter as gas exports surge by a massive 19 per cent per year.

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Coal production is expected to rise 8 per cent a year but the Resources Minister, Martin Ferguson, says Indonesia could overtake Australia as the biggest exporter of thermal coal.

Australians, though, will shift from fossil fuels. Seventy-five per cent of electricity is generated using coal. By 2030 solar, wind and geothermal energy could provide 40 per cent of power, rising to 50 per cent by 2050.

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The paper says carbon capture and storage would ''begin to make an important contribution by 2035'', and could boost the total ''clean energy'' generation in 2050 to 80 per cent of total supply.

The Greens leader, Senator Christine Milne, said it was a ''tragedy'' the white paper gave ''a completely two-faced view of the future in energy - promotion of fossil fuels, rush for gas, at the same time talking about a clean energy future. It doesn't add up.''

But the chief executive of the Australian Coal Association, Nikki Williams, said the strategy made sense. ''We are pleased that it recognises Australia's position as a global energy supplier. Australia's coal is lifting people out of poverty and is an essential input to the nation-building infrastructure in developing economies around the world,'' she said.

Mr Ferguson called on state governments to accept a package of reforms, including price deregulation, time-of-use pricing and measures to reduce the big peaks in demand, to reduce the need for infrastructure investment that has been pushing up power bills and to give consumers power control.

He will take the reforms to a ministerial meeting in a fortnight and the Prime Minister wants to finalise them at a premiers metting next month.

The Coalition resources spokesman, Ian MacFarlane, said the reforms followed what he had begun during the Howard years.

''Of course we support them … but this should have happened five years ago … rather than deal with Labor state governments, they've done nothing until now,'' he said.

NSW and Queensland, the two big states in the national energy market that have not yet fully deregulated energy markets, said they would proceed cautiously.

The NSW Energy Minister, Chris Hartcher, said NSW was ''on track'' to deliver some price deregulation but was wary of the cost of smart meters and the need for consumers to understand the market changes.